How to Make Cyber Insurance Part of Your Security Strategy

With the average cost of a data breach now sitting at $4.4M, organizations of all sizes are looking for ways to protect against and respond to cybersecurity attacks. What matters most is how prepared you are before the incident.

Now, more than ever, it’s essential to have proactive protection methods in place before the next attack occurs. This includes cyber insurance policies.

Cyber Risk Alert: Iran Conflict & Insurance Coverage

As the conflict involving Iran continues, cybersecurity experts warn of increased cyber activity by Iran aligned actors, including ransomware, data destruction, and disruptive attacks. These incidents may affect organizations far beyond the immediate conflict region.

What Many Organizations Don’t Realize:

Cyber incidents tied to geopolitical conflict may not be fully covered by cyber insurance due to a common policy provision known as the war exclusion.

Why This Matters:

Most cyber insurance policies include a war or warlike action exclusion.
Insurers may apply this exclusion to state sponsored or state attributable cyberattacks.
Coverage can hinge on how attribution is determined and how policy language is written.
Small wording differences can significantly impact whether a claim is paid.

What You Should Do Now:

Review your cyber insurance policy, paying close attention to war and state actor exclusions.
Ask direct questions about coverage for cyber incidents linked to geopolitical conflict.
Strengthen core cybersecurity controls, as weak security may complicate claims.
Plan for resilience, recognizing that insurance is only one part of cyber risk management.

Qualifying for a Cyber Insurance Policy

Choosing the right cybersecurity insurance policy includes understanding factors like the type of data you have and its value, notification requirements you must comply with, and specific risks others in your industry have reported.

But it’s important to note that coverage is not guaranteed. Underwriters will do a "wellness check" of your organization when you apply for cyber insurance. You may not qualify for a policy if you do not meet the following controls:

Multi-Factor Authentication
Multi-Factor Authentication (MFA) is a robust security measure that ensures the identity of users by requesting multiple forms of authentication. Organizations should enforce MFA for accessing sensitive systems, networks, and applications.
Security Awareness Training & Testing
This involves educating employees about cybersecurity best practices to recognize and prevent potential threats. Employees are the first line of defense against cyberattacks, so it’s important to develop comprehensive cybersecurity training programs for staff.
Separate Backups
Having separate and secure data backups is a key aspect of data recovery. Insurance companies assess whether organizations maintain offsite or segregated backups, which can be critical for data restoration in case of an incident.
Endpoint Detection & Response
Endpoint Detection and Response (EDR) solutions monitor and respond to suspicious activities. Organizations should work to implement EDR solutions on all endpoints, including computers, servers, and mobile devices. Ensure these solutions provide real-time monitoring and response capabilities.
Vulnerability Management
This refers to identifying, assessing, and responding to security vulnerabilities in an organization's IT infrastructure. To qualify for coverage, it’s important to conduct regular vulnerability scans on your organization's IT infrastructure. Prioritize and address high-risk vulnerabilities promptly.

Regardless of whether you invest in cyber insurance coverage, it's encouraged to evaluate your organization's security stance through a lens of these five essential control areas as they are fundamental in any cybersecurity strategy.

If your policies and procedures make you an acceptable risk for insurance carriers, they also reduce the risk of an attack.

Cyber Insurance as a Risk Management Strategy

As AI expands the attack surface, insurers increasingly view governance and monitoring as indicators of insurability. Over 90% of organizations reported an AI-related incident in 2025 and 63% lack AI governance policies.

Proactively securing cybersecurity insurance can provide several benefits, including:

Cyber insurance can help you recover financially from a breach.

Cyber insurance can help cover direct expenses, like hiring professionals to investigate the breach, restoring compromised systems, and notifying affected individuals or businesses. Depending on your policy, it may also assist with the indirect fees of a breach, including:

Business Interruption: When a cyberattack disrupts your operations, it can lead to significant revenue loss. Cyber insurance can cover the income you lose during downtime, which is crucial for mid-market organizations that cannot endure prolonged interruptions.
Reputational Damage: A data breach can negatively impact your organization's reputation, leading to decreased customer trust and a loss of future business. Cyber insurance may include coverage for public relations and marketing efforts to navigate the aftermath effectively.
Ransomware: In ransomware attacks, where cybercriminals demand a ransom to restore access to your data, cyber insurance can help cover the ransom payment.

Cyber insurance can help you recover financially from a breach. Insurance policies can help limit your legal liability.

Cyber insurance policies often come with access to legal professionals who specialize in data breaches. Their expertise can provide invaluable support in the event of an incident.

For example, breach attorneys can guide you through the legal complexities of a cyberattack. They can help you understand your obligations under relevant data protection laws and ensure you adhere to notification requirements, deadlines, and other legal obligations.

Your insurance policy may cover legal expenses for defending against claims, settlements, or judgments resulting from a data breach.

Carriers often have valuable relationships with security resources.

Cyber insurance carriers often have established relationships with trusted cybersecurity firms, like Eide Bailly. These relationships offer several advantages when looking at the broader picture of your organization’s security posture:

Access to Expertise: Carriers can connect you with cybersecurity professionals who can assess your organization's security posture, identify vulnerabilities, and recommend measures to reduce your risk.
Risk Mitigation: By leveraging these relationships, you can access security solutions and services that help reduce your organization's attack surface. These solutions might include penetration testing, threat intelligence, and cybersecurity training for your staff.
Regulatory Compliance: Engaging with these security professionals can also help ensure your organization complies with industry-specific regulations and standards.

Navigate Cybersecurity Complexities with the Help of Experienced Professionals

While cybersecurity insurance can play an important role in incident recovery, it’s only one piece of a comprehensive security strategy. We can help you understand your risks, fill any security gaps, and ensure you’re positioned to properly prevent, detect, and recover from a breach.

Frequently Asked Questions

What is cyber insurance?

Cyber insurance is a financial risk management tool designed to help organizations recover from the costs associated with a cyber incident, such as data breaches, ransomware attacks, and business interruption. It does not replace cybersecurity controls but supports recovery when incidents occur.

Is cyber insurance a substitute for cybersecurity?

No. Cyber insurance is not a substitute for cybersecurity. Insurers expect organizations to implement strong security controls and governance before coverage is issued, and policies are designed to support recovery — not prevention.

What do cyber insurance underwriters look for when evaluating an organization?

Underwriters assess whether an organization meets key security controls, often through a “wellness check” that evaluates technical safeguards, employee training, backup practices, and vulnerability management.

Why might an organization be denied cyber insurance coverage?

Organizations may be denied coverage if they lack required security controls, governance policies, or evidence that risks are being actively managed. Coverage is not guaranteed and depends on insurability.

Do security controls matter even if an organization doesn’t purchase cyber insurance?

Yes. The same controls insurers evaluate, such as MFA, backups, and monitoring, are foundational to reducing cyber risk and improving resilience, regardless of whether a policy is purchased.

How does cyber insurance fit into a broader risk management strategy?

Cyber insurance complements security investments by helping organizations manage the financial and operational impact of a cyber incident. It works best when paired with proactive risk reduction and governance.

Why must cyber insurance be secured before an incident occurs?

Cyber insurance policies cannot be purchased during an active cyber incident. Organizations must qualify for coverage in advance to ensure protection is available when needed.

How does AI affect cyber insurance eligibility?

As AI-related incidents increase, insurers are paying closer attention to governance, data protection, and monitoring practices. Organizations without AI governance policies may face higher scrutiny during underwriting.